Important Factors for Tire Site Selection, Facility and Layout

Last Updated on 06.08.2024 by hrushetskyy

IMPORTANT FACTORS FOR SITE SELECTION

Among the factors to consider when pinpointing an exact location for your tire store are:

1) Accessibility to potential customers.

2) The rent paying capacity of the business.

3) Restrictive ordinances.

4) Traffic density.

5) Customer parking facilities.

6) Proximity to other businesses.

7) History of the site.

8) Terms of the lease.

9) The rent advertising relationship.

Accessibility

High revenues in this business depend on a sufficient number of customers coming into your store, therefore customer access is very important. Several factors determine accessibility.

If you are on a four-lane road with median divider traffic on the far side of the street will not have easy access to your facility unless you have a comer location where left-hand turns are permitted. Similarly if traffic is often heavy and congestion occurs or if the speed of traffic is more than 35 mph drivers may have difficulty entering or leaving your site. Narrow entrances and exits turns that are hard to negotiate and parking lots that are always full are deterrents that can cause would-be customers to avoid your tire center.

If you depend a lot on pedestrian traffic the distance of your site from those locations generating customers is important. In a downtown shopping district or in a shopping center for example where a major retailer is the chief traffic generator the farther from that store the less accessible your business will be to pedestrians. Even your entrance can be important. If it is above street level on an upper floor or, if access can be gained only from a side street the site may be unsuitable for you.

We suggest you spend several days analyzing the site. Sit in your car and judge traffic (foot and auto) patterns at different times of the day. See if the traffic pattern fits the time when you would want to do business. Revisit the prospective site on several different days to see what changes in the pattern there are if any.

Rent

If you have done a sales-and-profit projection for your first year of operation you will know how much sales you can expect your business to generate. To judge your rental expenses (leased space plus any “add-on” costs) you can express the total amount you expect to pay on a monthly or annual basis as a percentage of projected net sales (gross sales minus returns and discounts) and compare that percentage with those of similar businesses.

For some high-volume businesses rental expenses can be less than one percent of net sales. For small retail shops or businesses with uneven sales the rent/net sales ratio can run as high as 10 percent.

For the majority of businesses rental expenses usually fall between 2 and 4 percent of net sales. Bear in mind that these are just average figures, premium rental space in a new or highly developed commercial area can push the percentage much higher, more on this in Facility.

Almost all lessons require a minimum dollar rental per square foot from their lessees usually paid on a monthly basis. This rental fee can run as low as $6/sq. ft. /year and as high as $36 and over at large shopping centers in high-traffic areas. The per- square-foot charge is usually based on the size of the area rented (normally renting a very large space entitles you to a somewhat lower charge per square foot), how it is to be used, the size and reputation of the lessee, and other factors.

On top of this minimum monthly rental lessons sometimes ask for a small to moderate percentage of the tenant’s monthly gross sales above a certain specified amount. In a small community shopping center anchored by a large drug store or supermarket the percentage charge should run around 6 percent. Larger regional shopping centers with at least one large department store may charge between 7 and 10 percent of gross sales depending on the newness of the center its size and customer traffic.

In addition to flat rents and percentages all retailers in a shopping center or mall may be asked to pay “add-ons a per square foot charge or small percentage of gross sales that covers advertising and promotion costs for the shopping area and upkeep of the common areas surrounding the businesses (parking sidewalks walkways sitting areas patios restrooms etc.). Also a shopping center or mall resident may be assessed a share of the total property tax based on the square- footage of his rented space.

Restrictive Ordinances

You may encounter unusual restrictive ordinances that make one otherwise ideal site less desirable than another such as limitations on the hours of the day when trucks are permitted to load or unload. Zoning and similar regulations are important when attempting to open a tire dealership in an area restricted against that kind of business, more on this subject in the Licenses and Taxes section.

Traffic Density

The majority of tire stores usually benefit from increased auto traffic but there are some exceptions. On streets where auto traffic is very heavy and moves at the speed limit would be customers are forced to ‘move along’ with the traffic flow. Even though a passing car might be in search of a particular store the driver may not be able to slow down enough to check the place out or find a convenient spot to drive in or park. As auto traffic is a key factor for your business remember that not every passing car represents a potential customer and of those that do the potential customer’s ability to park and get to the retail or service area are crucial considerations.

Auto traffic of potential customers is the key factor here. With careful examination of auto traffic you can determine the approximate sales potential of each vehicle passing a given location. Two factors are especially important in this analysis total vehicle traffic during business hours and the percentage of it that is likely to enter your tire store.

To make traffic counts select a few half hour periods during the busy hours of the day. Numbers alone however are not the most significant factor. Are these the type of people who would patronize a tire dealer as opposed to buying at their local garage? Why are they (the passersby) at the location at this time? Interview or hand out prepaid questionnaires to those passing by the site you are considering. Do they feel a need for a tire dealership at this location? Would they patronize it? What other kinds of services would they expect? Where do they now buy tires? Etc.

Parking

Does the particular site provide easy adequate parking and access for customers? Is it well-lit? Is there sufficient security? What is the condition of the parking area? (Will it need expansion resurfacing striping etc. possibly at additional cost?) If you are looking at a freestanding location (as opposed to an auto-related strip center for example) think big and envision how you will accommodate the hordes of customers your center will eventually attract

Proximity to Other Businesses

Your business neighbors may influence the volume of business you do. Their presence can work for you as well as against you particularly if you locate next to businesses in the same affinity class.

Studies of the natural clustering are of businesses show that certain businesses do well when located close to one other. For a tire center customers who patronize other non-competing auto-aftermarket businesses (quick-lube centers brake shops tune up shops etc.) are also prospects for your business.

Also try to locate near a shopping mall coffee shop or bookstore. Why? A significant percentage of your customers may wait while your crews mount tires for them. Nothing is more boring than to wait in a cramped room with out-of-date magazines and no amenities. If customers can kill time at a coffee shop or shopping center they’re much more likely to be satisfied ones. Also the proximity to a place where they can be comfortable can be used a promotional device to build your image as a well-located tire-service pro.

History of the Site

You should learn at least the recent history of each site under consideration before you make a final selection. Most Americans no longer believe in haunted houses but experienced merchants know that “jinxed” locations do exist these are sites in malls and big shopping centers as well as independent locations that have been occupied by successions of business failures. However the reason for one or several businesses failing in a given site may be completely unrelated to the success potential of your tire shop. Study the reason(s) for previous failures to determine if you can avoid them.

Terms of the Lease

Leasing considerations can sometimes be the major determining factor in your choice of a site. Occasionally a site that is otherwise ideal may have to be ruled out because the leasing terms are not right for your business. Remember that terms are negotiable and the time to negotiate is before you sign the lease. This topic is discussed more fully in Facility.

Rent-Advertising Relationship

You may need to budget up to six months’ advertising and promotion expenditures out of your working capital for your tire dealership. Few businesses can succeed without any type of sales promotion. In fact with all other factors held equal the larger the sum allocated for well placed well targeted advertising and promotion the greater the chance for business success.

The amount you plan to spend on advertising may be closely related to your choice of site and the proposed rent. Don’t sacrifice needed capital for advertising and promotion just to pay rent in a high- traffic location, such a location is desirable but location alone doesn’t bring in customers. Early on at least you’ll need to concentrate on promoting the business and the budget for this cannot be sacrificed to rental or mortgage/deed expenses.

FACILITY SIZE

Existing service stations and auto repair shops listed in the business classifieds and discussed in more detail later in this section are ideal. They typically have from one to three workdays and plenty of space for storing cars on the premises.

The size of such ready-made facilities will vary. You can build from scratch if you’re determined to but most small business owners are hemmed in by limited investment capital. We’ll assume you’re moving into an existing facility and have plans of making leasehold improvements.

Aim for a maximum of four bays in the start-up stage. Be aware that in this business the size and type of facility depends on the kind of marketing you do. In some markets one and two bay shops with aggressive promotion have a history of doing twice the volume of fancy 10-bay operations.

The size of the bays themselves can also vary. Bays should be a minimum of 10 feet wide (with 12 to 15 feet preferred) and a minimum of 16 feet long (preferably 20 to 25 feet). The rule-of-thumb is to be able to accommodate standard-sized automobiles plus the needed equipment and tools on either side. A three-bay shop for example located in an older gas station might be 35 to 40 feet wide if all the bays are in one line as is typical of older stations. Many shops have back to back configurations with two bays in the front and two in the back and folding doors on either end. In such cases the bays may fit into a space 25 feet wide and 30 feet deep.

You might end up with about 1 000 square feet for the bay section alone. The entire facility will probably total about 2 500 square feet.

If your bays don’t already have overhead doors you’ll have to install them. Expect to pay $700 to $2 500 for door installation depending on the construction of the building. Plate glass on these doors has to be laminated and installed to OSHA specifications.

The most desirable interior ceiling height is 12 feet or higher. Ceilings should be higher than the average 8 or 9 feet as you’ll be dealing with a fair share of vans pickups and RVs in many areas. In temperate climates open-air stalls with a roof overhead are sufficient if the entire facility is secure.

Some facilities will have separate merchandising/display space and warehouse space while others will have minimal retail display areas and in effect combine merchandising and warehousing in one limited area. Smaller operations warehouse about 300 to 500 tires stacked in four or five tiers one on top of another from 12 to 18 feet (depending on ceiling height). Such a configuration can take up about 400 square feet of floor space and in this kind of area the 300 to 500 tires will really be packed.

You also need an office/checkout area which is ready-made for you if you’re taking over an existing repair shop or garage. In some facilities this may be part and parcel of the retailing area. Also used for recordkeeping and other paper work this area is usually no larger than 150 square feet though the size may vary. Be sure to have locking file boxes or cabinets so that everything remains secure.

Allow space for a lounging area complete with one to three vending machines serviced by a vendor who will split a percentage of the profit with you. Near the reception area will be customer restrooms if required.

Auto repair or gasoline facilities are often not advertised at a price per square foot. Rather the facility as a whole which may be from 1500 to 2500 square feet is featured at e.g. $2 000 or so per month. Per-square foot costs may range from 50 to 85 cents or more per month depending on your area and not including your leasehold improvements.

Layout

Refer to the sample floor plan included with this report for general layout ideas. Note that you’ll need some kind of an alarm system (discussed in Equipment).

There are no hard and fast layout rules but veterans of the trade make several commonsense recommendations as to placement of equipment for example isolating your air compressor from the retail area as it’s noisy and can quickly prove irritating to waiting customers. In addition all equipment powered by the compressor should be easily accessible to all service personnel. The tire changer and spin balancer which are the biggest pieces of equipment will be permanently mounted and should be centrally located for ease of use. Air powered hand tools are fed by air hoses running down from the ceiling.

A portion of your service area will have benches cabinets or drawers for storing hand tools wheel weights and miscellaneous pieces of equipment and supplies. A long narrow building is suited for tools since the back wall can be lined with pegboards or cabinets and every tool outlined in a shadow board effect for instant inventory and quick and correct replacement. Also be sure you have enough well located grounded electric jacks to accommodate all power tools.

It’s useful to combine your retail service and office areas into one. Principal concerns here are the security of your receipts which can be handled with a cash register or a locking safe/cash box. Also TIRE STORE LAYOUT considers installing a buzzer or similar system that limits access to paperwork to you and your office worker(s).

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